Mayo Clinic in 2020 posted one of its strongest years financially of the past decade, including patient care revenue that recovered during the second half of the year and a surge of customer demand for COVID-19 tests at its lab business.
The results included $182 million in federal funding that was meant to support hospitals struggling with financial hits from the pandemic. The clinic actually received more than $300 million last year through the federal CARES Act, but made good on an earlier pledge and returned a total of $156 million.
Mayo Clinic Laboratories performed 3.1 million COVID-19 tests overall, which helped the lab’s revenue grow by more than 20%.
“It was a more successful year than we would have ever thought possible 11 months ago,” said Dennis Dahlen, the clinic’s chief financial officer, in an interview Monday.
Mayo Clinic is Minnesota’s largest employer with operations that span five states. Financial results released to bondholders Friday show the clinic posted operating income of $728 million for the year on $13.9 billion of revenue.
Revenue was up just 1.5% compared with 2019, which is a lower annual growth rate than normal — and a direct reflection, Dahlen said, of how the pandemic kept many patients away for several months.
Operating income was down more than 20% from the previous year. Yet Star Tribune figures show the earnings exceeded the clinic’s income during seven of the most recent 10 years.
“It was a year in which the staff responded to an amazing challenge put in front of us,” Dahlen said, “and did so incredibly successfully.”
After posting record income of more than $1 billion in 2019, the clinic started 2020 on a pace for more growth, Dahlen said. Things changed dramatically when COVID-19 hit the state and forced an unprecedented statewide suspension of nonemergency procedures.
Mayo saw a $600 million reduction in patient revenue between March and May.
Gov. Tim Walz ordered the delay in medical procedures so hospitals could care for an expected surge of pandemic patients at a time of short supplies in personal protective equipment. Hospitals were allowed to start resuming the procedures in May. By June, Mayo already was seeing signs of financial recovery.
The federal CARES Act directed billions to hospitals including a total of $338 million at Mayo. Mayo kept the federal funds it used in March, April and early May, Dahlen said, but decided to return the rest after the financial picture stabilized.
“We didn’t know what we were facing,” Dahlen said of the period during early spring. “We were leaning in on the test development phase, making sure we completed the research on how to create tests to detect COVID. And we were keeping our staff safe in April, guaranteeing salary and benefits through April despite the fact that we were essentially closed.”
As Minnesota in March was reporting its first cases of COVID-19, Mayo Clinic Laboratories scrambled to launch a COVID-19 test when diagnostic capacity across the U.S. was severely limited.
For years, the clinic has operated a large lab business in Rochester that receives thousands of samples every day from health care providers treating patients in 80 different countries. Those customers ordered a large number of COVID-19 tests last year, Dahlen said, and the clinic found new customers, as well.
More demand came in the spring as Walz launched a “moonshot” initiative to expand the state’s coronavirus testing capacity through a partnership with Mayo and the University of Minnesota.
For the year, Mayo Clinic Laboratories saw earnings jump by 69% to about $197 million on revenue of $998 million.
“It does reflect the fact that Mayo Clinic Laboratories played a significant part in the testing environment, really for the nation, during 2020,” Dahlen said. “The rest of our lab volumes were impaired for the year in total.”
Christopher Snowbeck • 612-673-4744
Twitter: @chrissnowbeck